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Aid from traditional donors continues to fall

Aid from traditional donors continues to fall
Published 5 Apr 2013 

Philippa Brant is a Lowy Institute Research Associate.

Foreign aid from 'traditional' donors slipped another 4% in real terms in 2012, according to the latest statistics released by the OECD's Development Assistance Committee (DAC). This comes on top of a 2% fall in 2011. The ongoing financial crisis and turmoil in the eurozone is being blamed for the reduced generosity.

Some highlights from the 2012 data:

  • The 25 members of the DAC provided US$125.6 billion in net overseas development assistance (ODA) in 2012.
  • The US, UK, Germany, and France continue to provide the most aid, by volume.
  • The largest cuts came, not surprisingly, from the PIGS: Portugal (-13.1%), Italy (-34.7%), Greece (-17.0%) and Spain (-49.7%).
  • Australia features as one of the DAC members with the largest annual increase (-9.1%), due to its commitment to scale up ODA to reach 0.5% of GNI in 2016–17.
  • Cuts were seen in core contributions to multilateral institutions (-7.1%), rather than in core bilateral projects and programs (-2.0%).

Rowan Callick's article (paywalled) in yesterday's Australian questions why our aid priorities should be set by the DAC, but there is a strong case to be made for foreign aid data to be collected and reported in a standardised way. Governments, researchers, and development practitioners all use this data for planning and analysis. [fold]

As anyone who works on 'emerging' donors like China would know, trying to analyse the aid programs of these providers who don't measure and report using the DAC system means you are comparing 'apples with lychees', to take Deborah Brautigam's phrase.

Recent research from the Overseas Development Institute highlights the changing aid landscape, with the growth of development assistance from 'non-DAC' sources — philanthropists, global funds, countries that don't report to the DAC — now outpacing that of traditional DAC aid. This 'new age of choice', the report argues, is challenging the primacy of aid from traditional sources.

In part to help maintain its relevance within this increasingly fragmented international aid architecture, the DAC has been reaching out to 'non-traditional' donors. Some, like Korea and Iceland, recently made the decision to join the DAC. Others, like the UAE and Turkey, are making efforts to report their ODA figures to the DAC, and in turn benefit from its expertise.

The DAC can be rightly criticised for being an institution of the old world order, and there is perhaps little imperative for countries like India, China, and Brazil to join. However, its annual, systematic release of data helps measure the current state of government-funded assistance to developing countries. And, as the 2012 figures demonstrate, this trend is not positive.

Photo by Flickr user USAID_IMAGES.

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